Flopping BBBEE might propel radical alternatives

South Africa’s economic redistribution programme, Broad Based Black Economic Empowerment (BBBEE), seems to be losing steam in a picture which might be used by the emerging radicals like the Economic Freedom Fighter (EFF) to gain further political currency.

The picture of lacklustre BBBEE progress emerges from the latest KPMG BBBEE survey, one of the most credible surveys of its kind the country. The consulting firm, KPMG, released yesterday the results of its 2013 BBBEE survey which shows a significant slide in the average BBBEE score from 63.95% in 2012 to 52.53% in 2013 within KPMG sample.

This means South African enterprises are slowing down their effort of transforming their shop floors to reflect the country’s demographics. The BBBEE scorecard measures transformation through seven factor including ownership and workplace demographics.

The results of the KPMG survey add to litany of exhortations about slow pace of economic transformation or the freedom dividend 20 years after South Africa was declared a free country. Dissatisfaction with the rate at which the South African economy is absorbing black people is fomenting radicalisation which can be witnessed at party political level and in the civil movement.

The EFF, a splinter from the ANC and headed by former ANC Youth League President Julius Malema is feeding from a wide spread economic disgruntlement amongst black people and in particular black youth. Launched last year (2013), the EFF garnered more than 1 million votes and 6.35% of the national share of the votes cast on the 7th of May 2014.  There is also the emergence of the Association of Mineworkers and Construction Union (AMCU) which is styled as more radical than the age old National Union of Mineworkers (NUM). Even within the ANC there is discomfort with the economic transformation path followed over the past 20 years. Resolutions which came out of the ANC’s 53rd national congress in Mangaung, in December 2013, is a witness of the growing discontent about the South Africa’s economic distribution poser Black Economic Empowerment (BEE).

On the KPMG scales, the South African economy has on average dropped in BBBEE rating from level 5 to level 6.

KPMG says the decline can be explained by a few factors. Preferential Procurement has decreased by 2.79, Enterprise Development by 2.09 and Ownership by 1.98.

Management Control has also dipped from an average of 4.87 obtained in the 2012 results, to 4.28 in 2013. Similarly, Socio-economic Development fell from 4.92 points in 2012 to 3.75 points in 2013.

Boitumelo Ngutshane, Director of KPMG BEE Advisory said “South African companies must review their transformation strategy if they are to achieve the goals of BEE – up-skilling and employment of black people, and the increased development of and procurement from black businesses. She added that “The survey results support the compelling case for Revised Codes”.

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